Where cash bonuses or pay rises are insufficient or infeasible, share incentive plans can offer a flexible and tax-efficient way to reward staff.

The pandemic has undoubtedly had wide-ranging effects for businesses and staff alike. Many business owners are therefore seeing this as an important time to review their workplace rewards, with longer-term recognition in the form of equity incentives becoming increasingly popular.

From share options (such as the highly tax-efficient Enterprise Management Incentive (EMI) scheme), through to growth shares and full equity rewards, there are a number of alternatives to suit every business situation. Whether designed to motivate and retain staff, or as part of recruitment efforts to attract key people to the business, share incentives can really support a performance culture and business growth.

Choosing the right solution for your business is important and the correct implementation is vital. There are significant tax advantages associated with equity ownership, but also huge pitfalls when seeking to pass any value to employees. Ultimately, creating a large upfront income tax liability for an employee could go some way to undoing the good intentions of the proposed share ownership!

However, with the right professional advice, share incentive plans can be a fantastic tool for ambitious businesses. To learn more about them in the context of your business, contact our tax team on 01788 539000 or 0116 261 0061.


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